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Below the Quote on Residential Real Estate Sector by Pankaj Kumar, VP – Fundamental Research, Kotak Securities

All-India residential sales remained healthy in Q1FY25 at 25.9 cr sqft (+12% yoy, -12% qoq), despite the first quarter being a seasonally weak period and some election-related impact on new launches. Healthy sales momentum led to continuous inventory liquidation which stood at ~15 months of sales. Listed players delivered strong performance, aided by new launches. Godrej, Signature, DLF and Oberoi saw strong growth. Multiple premium launches in NCR market from large developers led to sharp price uptick. Developers continue to guide for double-digit growth, aided by industry growth and market share gains. We believe that speculated slowdown in certain market (like NCR) is not reflected in sales momentum and expect the trend to remain buoyant in H2FY25E. Valuations for most residential real estate stocks are at the higher end of their past trading range (stand at 8-12x FY26E adjusted EV/EBITDA), reflecting strong underlying business performance and changing investor interest. We remain constructive, owing to the players’ strong operational performance and prefer DLF (ADD, FV Rs960), Brigade (ADD, FV Rs1320) and Signature Global (ADD, FV Rs1555).  

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